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student loans

i heard from a guy who was studyn through a loan provided by NSFAS, which allegedly is supposed to help the poor get tertiary education. This guy graduated and passed with flying colors, but for three years he couldnt get a job. After those 3years, his loan debt had increased to more than R52000, up from the original R28000 he borrowed. When he asked why the debt was so high, they said its interest accumulated. He also claims he never recived any letter from them during those 3years. Whether that is true or not is out of the question because school loans with accumulative interests to people who know little about financial education is daylight robbery. Worse is that these people are unemployed and this wasnt explained to them. How are they going to pay it back? Its as bad as a bank loan. What can one do in such a situation?

Student loans certainly are a tricky business to judge. In many ways it's a great investment as it should increase you earning power dramatically - provided you can get a job, of course! But there are some aspects that seem a bit dodgy.

One of those are the way interest is handled (and here I'm talking about bank provided student loans). To help bridge the big hit for my son's first year of studies, he had a student loan. But the moment he went part-time instead of full-time, the bank upped the interest rate. And I don't recall anything to that effect in the student loan agreement. The rate while he was a student was spelled out - what happened after that was not mentioned; at least it wasn't mentioned by the consultant we were chatting to at the time of signing.

And then we have the person with a student loan that does not pass the course. Fair enough, the loan needs to be repaid, but the big reward isn't going to be there which puts them in a difficult position surely.

I wonder how this new government initiative of converting student loans to bursaries when a person successfully completes the course is going to be done in practical terms.